Applied Finance Letters (E-Journal - Auckland Centre for Financial Research)
Not a member yet
149 research outputs found
Sort by
NZX Joins the Race to Minimise Tick Size
Full text linkIn 2011, the New Zealand Exchange (NZX) reduced the minimum tick size from 0.005for seventeen dual-listed and property stocks, with the stated objective of boosting NZX liquidity.After controlling for firms matched on similar liquidity characteristics, both spread and depthsignificantly decline, and there is some evidence of higher turnover. However, smaller firms donot enjoy the same liquidity benefits as larger firms. For example, smaller firms and those withgreater illiquidity prior to the tick change, experience deterioration in turnover after the change
Foreword for Applied Finance Letters: March 2013
No full textIn my ten years as Retirement Commissioner (2003 to 2013) I saw the field of financial literacy blossom. During that time there was a growing appreciation of the importance of financial education and financial literacy, though at first they struggled to gain traction. Now they are well on the radar and the OECD coordinates an international network on financial education, encompassing 220 public institutions from over 100 countries. I was delighted to be part of this network as it grew over the years. New Zealand led the way with the Sorted website and development of a National Strategy for Financial Literacy. The strategy’s mission is to ensure that New Zealanders are financially well-educated and can make informed financial decisions throughout their lives. There are four separate areas of focus: to develop quality, extend coverage, work together and share what works.Quality has improved through the development of a competency framework and programmes to upskill teachers and trainers in financial education. The coverage of financial education has grown, for example through its introduction to the New Zealand school curriculum and to workplaces and the tertiary sector. Working together and sharing have been fostered through initiatives such as a community of practice and the inaugural Money Week in September 2012. In July 2013 the biennial financial literacy summit will for the first time take place in Auckland.But our knowledge of “what works” is far from complete and frankly it has taken research and evaluation a while to catch up. I’m thrilled to see this special issue of “Applied Financial Letters” on financial literacy. Much of the existing research base is derived from the northern hemisphere and it’s good to see more work being done in our own Australasian context.Of course financial literacy is just one of the factors that contribute to overall financial wellbeing (another concept crying out for better definition and research). There also needs to be an efficient and effective regulatory environment, a thriving economy (from which individuals derive sufficient income), a diversified market for financial products and services, a trustworthy financial sector, consumer protection and market power, and a welfare “net” for those who fall through the cracks. I commend AUT’s Auckland Centre for Financial Research for its initiative in producing “Applied Financial Letters” and we look forward to future issues on a wide range of topics relating to financial education, financial literacy and financial wellbeing
Current Developments in the New Zealand Stock Exchange
Full text linkNew Zealand’s capital markets are riding on the crest of a wave. But unlike past peaks inthe equity market that have been few and far between, the wave we are currently ridingis the first in a set of breakers that will transform our capital markets and support a stepfunction change in New Zealand’s economic growth
Leading Financial Literacy in Australia
Full text linkIn Australia financial literacy work nationally is guided by the principles of the NationalFinancial Literacy Strategy, a collaborative multi-agency strategy coordinated by theAustralian Securities and Investments Commission (ASIC). This provides a framework for manyagencies and organisations to work in partnership to develop and deliver initiatives to improvethe financial literacy of all Australians. This article highlights the thinking behind the strategy,presents examples of the strategy in action, and foreshadows next steps. Above all, it arguesthat the challenges of improving financial literacy are best shared – i.e. that a collaborativeapproach between sectors and countries remains the most effective way forwar
Why Do Financial Literacy Programmes Fail?
Full text linkNumerous studies have found a positive relationship between financial literacy andfinancial experience. Typically, this relationship is interpreted as being a causal relationship,i.e. an increase in financial literacy leads to better financial decision making. However, asimple relationship cannot be interpreted in a causal way. In this paper, we show evidencefor a causal relationship running the opposite way, i.e. people with more financial experienceseem to acquire more financial knowledge and become more financially literate. Thisfinding has important implications as it suggests that programmes targeted at improvingfinancial literacy could be more effective if they incorporate experiential components
Retirement Realities
Full text linkRetirement is a time that is long anticipated by the working population, and arriveswith substantial expectations of what it will be like. A survey was undertaken to explorethe actual experiences of New Zealanders aged 65 and older. Key messages to emergewere: most respondents were satisfied with their life in retirement; the importance ofsaving for retirement; concerns around financial resources related in part to the fasterrate of increase of basic living costs relative to income; and, the risk of the unexpected
Light-handed Regulation in New Zealand Banking and Financial Services: Has it worked?
Full text linkThis paper reviews banking regulation in New Zealand from the deregulation of the1980s through to the present day. It focuses on the effects of light-handed regulationthat was introduced as part of the deregulatory process and examines its effectivenessfor protecting depositors and at preventing the (potential) looting of New Zealandbanks by their foreign owners. It notes the extent of reregulation now being undertaken
What Behavioural Economics Has to Say about Financial Literacy
Full text linkGaps in financial literacy are arguably responsible for significant errors in decision-makingby consumers and investors alike. Unlike the conventional neoclassical economic wisdom,behavioral economics opens the analytical door to the significance of financial literacy fordecision-making. This paper presents evidence on the importance of financial literacy as wellpresenting the different analytical approaches to financial literacy that flow from neoclassicaleconomics and from the different methodological approaches to behavioral economics.Of particular importance is the errors and biases approach, which attributes much offinancial illiteracy to the cognitive shortcomings of the human brain. Whereas the boundedrationality approach focuses on informational gaps (complex and asymmetric information),framing effects, institutional design problems, and human capital deficits (inclusive ofexperiential learning), as key to understanding documented gaps in financial literacy.The behavioral approaches have significant implications for analyses and public policy
Impact of Corporate Governance on Financial Practices of New Zealand Companies
Full text linkThis study examines the effects of firm level corporate governance on financing policiesof New Zealand firms. Using a unique self-constructed corporate governance index andemploying the methodology of Fama and French (1999) of financing of firms, we can reportthat firms with weak corporate governance generally issue more debt and have significantlyhigher cost of capital than do firms with strong governance. It is further observed thatcorporate governance does not have significant impact on dividend policy in New Zealand